* Shell, Total, Equinor launch share buybacks
* Profits surge on higher oil prices, pandemic recovery
* Cash boost supports energy transition plans
(Adds TotalEnergies CEO comment)
By Ron Bousso
LONDON, July 29 (Reuters) - Europe's top energy companies
signalled confidence in a lasting recovery from the pandemic
impact by drawing on higher oil prices to boost shareholder
returns and reassure investors as they roll out risky climate
strategies.
After swiftly cutting spending and jobs in response to the
unprecedented collapse in energy demand last year, executives
from Royal Dutch Shell, TotalEnergies and
Norway's Equinor were eager to highlight the rapid
reversal in fortunes.
"We wanted to be really clear and signal to the market the
confidence that we have in our prospects and our cash flows,"
Chief Executive Ben van Beurden said on Thursday, after Shell
launched a $2 billion buyback programme and boosted its dividend
for a second consecutive quarter, a year after cutting it for
the first time since the 1940s.
Energy companies have come under heavy pressure from climate
campaigners, governments and shareholders to speed up the shift
from fossil fuels to cleaner sources.
While some investors welcome the change as they perceive
carbon-intensive, fossil fuel energy as unsustainable, others
are worried about the implications for profit margins of new
business models.
Benchmark Brent crude oil prices more than doubled
in the second quarter from a year earlier to around $69 a
barrel, driven by recovering demand and tightening global
supplies.
As profits surged, France's TotalEnergies also announced on
Thursday plans to buy back shares. CEO Patrick Pouyanne said
however that a large increase in dividends would not be
reasonable yet and would be linked to higher cash flow.
The group said it expected to generate more than $25 billion
in cash flow this year, based on current high oil price
forecasts, and would invest in more new projects and return
surplus amounts to shareholders if oil prices remained high.
Equinor also said on Wednesday it would begin a long-planned
share buyback that will reach $300 million by the end of the
third quarter after profits surged.
BP reports its second quarter results on Aug. 3. It
launched a $500 million buyback in the previous quarter after
halving its dividend last year.
WEANING THEMSELVES OFF OIL
BP, as well as Shell, TotalEnergies and Equinor, plans to
sharply reduce greenhouse gas emissions in the coming decades
while reducing reliance on fossil fuels.
Oil prices are expected to remain elevated in the coming
years as supplies stay tight because of lower investments.
High fossil fuel prices are double-edged. They can tempt
operators to maximise conventional output, but they also produce
income needed to invest in lower carbon sources.
Shell's free cash flow - money left after deducting spending
and shareholder payouts - soared in the second quarter to $9.7
billion, its highest in a year, while debt also declined.
"The quarter proves without doubt that Shell's earnings
power is intact and that they're willing to pay investors
handsomely to come on their transformation journey," Bernstein
analyst Oswald Clint said.
TotalEnergies's results are a "confirmation that the group
is geared to the macro environment and can deliver both on the
energy transition and cash returns to shareholders," Barclays
analysts said in a note.
Despite the surge in revenue, Shell and TotalEnergies
indicated they would stick to previous spending plans.
Shell said it will not spend more than its planned $22
billion this year and any increases in the futures will go
mostly towards low-carbon businesses.
TotalEnergies said investments would reach between $12 and
$13 billion in 2021, with half of that earmarked for growth
projects, including a major chunk in renewable energy and
electricity.
(Reporting by Ron Bousso; editing by Barbara Lewis and David
Evans)
